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RAMON L. LAGUARTA
PepsiCo Chairman of the Board of Directors
and Chief Executive Officer
DEAR FELLOW
SHAREHOLDERS,
When I became CEO in the fall of 2018,
I inherited a company that was built to
compete in the marketplace and continue
delivering good performance. In many
ways, we were operating from a position
of strength. But we knew we hadn’t yet
unlocked our true potential, and at PepsiCo,
just good is not good enough. So, we
decided to embark on a journey to become
a great company in every sense of the
word — great in the marketplace, great in
our capabilities and talent, great for the
sustainability of our planet and communities.
A little over one year later, that journey is far
from finished, but I can say with confidence
that our strategy is working, as evidenced by
the results we delivered in 2019 — meeting
or exceeding all of the financial objectives
we had set out for the year:1
•
Our rate of
organic revenue growth
accelerated to 4.5 percent
— our fastest rate
of growth since 2015.
•
All our divisions contributed to this
growth, including an
8 percent increase
in organic revenue in developing and
emerging
markets and a
3 percent increase
in developed
markets.
•
We delivered
in excess of $1 billion in
productivity
savings.
•
We are
gaining share in the majority of our
top markets
in both snacks and beverages.
These results were driven by two critical
forces: the tireless, dedicated work of our
world-class associates — approximately
267,000 strong, serving customers and
consumers in more than 200 countries
and territories around the world — and
our targeted investments to make PepsiCo
Faster
,
Stronger
, and
Better
.
We’re investing to become
Faster
by winning
in the marketplace, being more consumer-
centric and accelerating investment for
topline growth;
Stronger
by transforming
our capabilities, cost, and culture to operate
as one PepsiCo, leveraging technology,
winning locally and globally enabled;
and
Better
at integrating purpose into our
business strategy and brands, whilst doing
even more for our planet and people.
We’re making tremendous strides on
all fronts. During 2019, we invested in
becoming
Faster
by:
•
Increasing our
global advertising and
marketing spending
by more than
12 percent for the full year, reflecting
investments across snacks and beverages,
in both our large, established brands and
our emerging brands;
•
Expanding our
market presence
by
increasing route capacity, adding
merchandising racks and coolers, and
advancing the technologies we deploy to
drive greater and more precise execution;
•
Investing in
additional manufacturing
capacity
to remove bottlenecks and
increase growth capacity for our products.
This includes investments in new plants,
new lines, and added distribution
infrastructure; and
•
Accelerating
innovation
, including new
innovations like Gatorade Zero, bubly,
Lay’s Yam, and Off the Eaten Path, as
well as innovations we’re lifting and
scaling around the world like Pepsi Black,
Poppables, Flamin’ Hot, and Lay’s Baked
Potato Chips.
While we intend to continue to invest back
into the business, we know that sustaining
higher growth will require building
Stronger
capabilities, ones which will be difficult
to match competitively. During 2019, we
enhanced our consumer- and customer-
facing capabilities, strengthened our
organizational culture, and transformed
our cost management. Specifically:
•
We invested in
data analytics and other
information technology
to build consumer
intimacy and achieve “Precision at Scale.”
By capturing and analyzing more-granular,
1. Full-year 2019 reported net revenue increased 3.9%. Full-
year 2019 developing and emerging markets reported
net revenue increased 2%. Full-year 2019 developed
markets reported net revenue increased 4.5%. Organic
revenue growth is a non-GAAP financial measure.
Please refer to “Reconciliation of GAAP and Non-GAAP
Information” beginning on page 143 of this Annual
Report for definitions and more information about these
results, including a reconciliation to the most directly
comparable financial measure in accordance with GAAP.
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